NAICOM to sanction 24 underwriting firms for alleged claims’ default

THERE are indications that the National Insurance Commission (NAICOM) will reel out sanctions against 24 weak underwriting firms in the insurance industry that failed to comply with the Insurance Act 2003 and directives issued by the commission on claims settlement.

The commission had vowed to sanction defaulting insurance firms with effect from October 1, that failed to clear backlogs of claims to corporate and individual policyholders.

Sources at the commission, however, hinted that at the expiration of the deadline, seven insurance firms were queried on the status of their accounts, while 17 insurance firms are yet to submit financial statements as at June 2015.

The crackdown followed investigations by the commission as well as complaints by policyholders that some of these insurance companies had not been paying claims, and are mainly traced to these weak underwriting companies.

For instance, in the first half of this year, the commission successfully resolved 34 complaints arising from disputes over delayed or non-settlement of genuine insurance claims, out of a total of 147 complaints from policyholders, beneficiaries or their representatives during the period.

It will be recalled that the Complaints Bureau unit of the commission was established in line with extant laws to process and resolve complaints received from aggrieved insurance consumers and beneficiaries on all aspects of insurance contract business in Nigeria.

Industry sources traced non-settlement of claims to these weak insurance companies in the industry because of the financial difficulties they are experiencing due partly to near collapse of the capital market which eroded their capital base and balance sheet of the companies.

A directives issued by the commission titled “Claims settlement and the image of the insurance industry” signed by the Commissioner for Insurance, Mohammed Kari, warned all insurance firms to comply immediately or face the wrath of the law. “You would recall that the commission collated claims details from all insurance companies and complaints on delayed and unsettled claims from members of the insuring public. In its efforts to verify the persistent complaints of the consumers of insurance about an unsavory attitude of the providers that has brought the image of the industry to disrepute.

“Our study of the records and complaints received has confirmed the truth of this situation which happily is perpetrated only by a few whose sad posture stains the efforts of the many. In the continued effort of the commission to sanitize the industry of this unpalatable tags and restore the confidence of the insuring public, all insurers are hereby directed to note that: Henceforth, all claims must be handled strictly in accordance with the provision of the Insurance Act 2003.”

The commission said “Over the years, incidents of unsatisfactory response to settlement of claims by underwriters seem to have contributed to the poor public perception of insurance as a financing option. We want to shake off the yoke of the inglorious past and chart a new beginning for the industry anchored on the principles of trust and utmost good faith, the basic pillars of insurance practice”.